The ability of two-equation models to accurately predict separated flows is analyzed from a combined theoretical and computational standpoint. Turbulent flow past a backward facing step is chosen as a test case in an effort to resolve the variety of conflicting results that were published during the past decade concerning the performance of two-equation models. It is found that the errors in the reported predictions of the k-epsilon model have two major origins: (1) numerical problems arising from inadequate resolution, and (2) inaccurate predictions for normal Reynolds stress differences arising from the use of an isotropic eddy viscosity. Inadequacies in near wall modelling play a substantially smaller role. Detailed calculations are presented which strongly indicate the standard k-epsilon model - when modified with an independently calibrated anisotropic eddy viscosity - can yield surprisingly good predictions for the backstep problem.